1A cumulative finding list of previously published rulings mentioned in Internal Revenue Bulletins 1958-27 through 1958-52 will be found in Internal Revenue Bulletin 1959-1 dated January 5, 1959.

Revenue Ruling 57-105, dealing with the time for ac- Rev. Rul. 59-59,
crual for Federal income tax purposes of additional
state income taxes asserted against a taxpayer, is
clarified.

Regulations 111 and 118 have been amended to pro-
vide further suspension of certain periods of limita-
tion within which there may be a nonrecognition of
gain in the case of the sale or exchange of a resi-
dence by a member of the Armed Forces of the
United States.

page 7.

T.D. 6360,

page 35.

page 6.

An amendment of the regulations relating to the de- Announcement,
termination of undistributed personal holding com-
pany income and undistributed foreign personal
holding company income has been proposed to re-
flect the amendments made by the Technical
Amendments Act of 1958.

ESTATE AND GIFT TAX:

page 8.

The Revenue Service outlines the approach, methods Rev. Rul. 59-60,
and factors to be considered in valuing shares of
capital stock of closely held corporations for estate
and gift tax purposes; Revenue Ruling 54–77, super-
seded.

EXCISE TAXES:

page 15.

For purposes of the exemption extended by Revenue Rev. Rul. 59-61,
Ruling 296, a national of one of the member nations
of the British Commonwealth of Nations employed
by some other member nation of the Commonwealth
is considered to be a national of the country of the
diplomatic mission where employed.

page 16.

The Revenue Service discusses the applicability of the Rev. Rul. 59–62,
retailers tax on jewelry and related items to certain
transactions which occur when the winners in a con-
test are awarded certificates entitling them to un-
mounted diamonds as prizes.

(Continued on page 3)

Index on page 38.

TREASURY DEPARTMENT • INTERNAL REVENUE SERVICE

497086-59-1

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for the announcement of official rulings and procedures of the Internal Revenue Service, and for the publication of Treasury Decisions, Executive Orders, tax conventions, legislation, and court decisions pertaining to internal revenue matters. Other items considered to be of general interest are also published in the Bulletin, such as announcements relating to proposed regulations published with notice of proposed rulemaking, announcements relating to decisions of the Tax Court of the United States, announcements of the disbarment and suspension of attorneys and agents from practice before the Treasury Department, Delegation Orders, etc.

It is the policy of the Service to publish in the Bulletin all substantive and procedural rulings of importance or of general interest, the publication of which is considered necessary to promote a uniform application of the laws administered by the Service. It is also the policy to publish all rulings and statements of procedures which supersede, revoke, modify, or amend any published ruling or procedure. Except where otherwise indicated, published rulings and procedures apply retroactively. Rulings and statements of procedures relating solely to matters of internal management are not published. However, statements of internal practices and procedures affecting rights or duties of taxpayers, or industry regulation, which appear in internal management documents, are published. Revenue Rulings and Revenue Procedures are based upon rulings and internal management documents prepared in the various divisions of the National Office, including the Office of the Chief Counsel for the Internal Revenue Service. In the preparation of these, caution is exercised to conceal the identity of the taxpayer, as well as any confidential personal and business information. All Revenue Rulings published in the Bulletin have received the consideration and concurrence of the Chief Counsel.

Revenue Rulings and Revenue Procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations (including Treasury Decisions), but are published to provide precedents to be used in the disposition of other cases, and may be cited and relied upon for that purpose. Since each published ruling represents the conclusion of the Service as to the application of the law to the entire state of facts involved, Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. In applying rulings and procedures published in the Bulletin,

DEPOSITED BY THE

UNITED STATES OF AMERICA

3

HIGHLIGHTS OF THIS ISSUE―(Continued from Page 1)

EXCISE TAXES-Continued

page 21.

The applicability of the manufacturers tax to the use Rev. Rul. 59–63,
by the manufacturer of a taxable article in the fur-
ther manufacture of a nontaxable article is not af-
fected by the sale of such nontaxable article to a
state or political subdivision thereof.

Regulations have been issued relating to the exemption T.D. 6358,
from the tax of amounts paid for the transportation
of persons on small aircraft operated on nonestab-
lished lines.

TOBACCO TAX:

Regulations have been adopted which implement the provisions of section 6423 of the Code to preclude the refund or credit of tobacco taxes to claimants who have not borne the ultimate burden of the tax.

ADMINISTRATIVE:

page 23.

page 26.

The authority of the Select Committee of the Senate E.O. 10801,
to inspect certain tax returns has been extended to
cover returns for the years 1945 to 1959, inclusive;
E.O. 10703, amended.

59-219,

A public hearing on the proposed regulations under Announcement section 6851 of the 1954 Code, relating to the termination of the taxable year of certain taxpayers, will be held in Washington, D.C., on Friday, March 6, 1959.

page 48.

INTRODUCTION-(Continued from page 2)

personnel of the Service and others concerned must consider the effect of subsequent legislation, regulations, court decisions, rulings and procedures.

Each published ruling is designated as a "Revenue Ruling," and each published procedure is designated as a "Revenue Procedure." These should be cited by reference to the year of issuance and the Bulletin and page where reported. Thus, Revenue Ruling No. 11 for 1959, which is reported on page 18 of Bulletin No. 2 for 1959, should be cited as "Rev. Rul. 59-11, I.R.B. 1959-2, 18," until it appears in the Cumulative Bulletin, when it should be cited as "Rev. Rul. 59-11, C.B. 1959-1, -." Similarly, Revenue Procedure No. 1 for 1959, which is reported on page 61 of Bulletin No. 6 for 1959, should be cited as "Rev. Proc. 59-1, I.R.B. 1959-6, 61," until such time as it appears in the Cumulative Bulletin. Revenue Rulings are keyed to the applicable sections of the Internal Revenue Code and regulations. The Bulletin is published weekly and may be obtained on a subscription basis from the Superintendent of Documents, as indicated below. The contents of the Bulletin are consolidated at least semiannually into a permanent, indexed, Cumulative Bulletin. These are sold on a single-copy basis. Subscribers to the weekly Bulletin will be notified when copies of the Cumulative Bulletins are available.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. Price 20 cents (single copy). Subscription price: $6.00 a year; $2.75 additional for foreign mailing.